ExxonMobil (XOM -0.01%) is the hands-down leader of today's carbon-powered world. The company is an industry-leading producer of hydrocarbons. It's also the most profitable company in the sector by a wide margin. The energy giant expects to invest heavily over the next several years to continue growing its legacy hydrocarbon business.
At the same time, it's also ramping up its investments in lower-carbon energy. Those investments should fuel billions of dollars in incremental earnings in the coming decades.
$30 billion by 2030
ExxonMobil recently unveiled its bold 2030 vision. It aims to grow its capacity for earnings and cash flow by $20 billion and $30 billion, respectively, by 2030. The main driver is investing $140 billion into major projects and its Permian Basin development plan over the next several years. It expects these investments to generate returns of more than 30%.
Another aspect of Exxon's 2030 plan is the pursuit of up to $30 billion of low emissions opportunities in the 2025 to 2030 timeframe. Roughly 65% of that spending would be on projects to help reduce emissions for third-party customers. It aims to build three lower-carbon solutions business units focused on carbon capture and storage, hydrogen, and lithium.
The energy giant has several projects already under development. For example, it's working on the world's first large-scale carbon capture and storage system. It features a high-capacity pipeline system that would connect carbon emitters across several industries to permanent sequestration sites along the U.S. Gulf Coast.
Exxon is also working on what would be the world's biggest low-carbon hydrogen production facility. It could produce up to 1 billion cubic feet of hydrogen per day, with 98% of the associated carbon dioxide captured and stored. Exxon is working toward making a final investment decision on this project by next year, with the potential to begin production in 2029.
The company is also working to develop its large-scale lithium resource in Arkansas. It set a bold goal to produce enough lithium to power 1 million electric vehicles by 2030.
Producing more profits
Exxon's investments in low-carbon solutions could generate significant and growing earnings in the coming decades. The company believes this platform could produce $2 billion in earnings by 2030.
Exxon is also investing to develop other new products in its downstream product solutions business. These new product lines include its revolutionary Proxxima thermoset resin product, advanced recycling, lower-emissions fuels, and carbon materials. The company has several projects already underway, including a renewable diesel project in Canada, additional advanced recycling units in Texas, and an expansion of its thermoset resin manufacturing facilities in Texas.
Add the incremental income from those new product solutions categories to the company's lower carbon solutions businesses, and Exxon's new businesses could provide $3 billion in earnings potential by 2030. The energy company expects that number to continue growing, potentially reaching $13 billion by 2040. Earnings from these new products will likely continue rising in the decades ahead as Exxon scales these new businesses. The company sees massive market opportunities, with the potential addressable market of these new product categories surpassing $2.3 trillion by 2050.
Exxon is investing with the future in mind
ExxonMobil plans to plow $30 billion into lower emissions opportunities by 2030. It's building out several lower-carbon energy businesses to complement the increasingly lower-carbon focus of its product solutions segment. That's part of its strategy to build the energy company of the future. These investments will add several new income streams to its business over the coming years that have the potential to grow significantly in the decades ahead. This strategy positions Exxon to remain a leader in the energy sector for a very long time.